London Borough of Newham has established a new commission to help it get a grip on its financial management after a series of scandals.
The new body will assess the council’s internal control environment after more details emerged over an £8.78m overspend in its repairs and maintenance service (RMS) that led to a senior manager being dismissed for gross misconduct.
At a meeting this week, the council’s cabinet agreed to form the new commission, which will draw up a new model of best practice of internal control for the council, along with an action plan.
Newham mayor Rokhsana Fiaz, said: “The Internal Control Commission is the latest step in my promise to make Newham Council more open and transparent than ever before. “Their investigation will allow us to put right the mistakes made in financial control within RMS.
“In addition, the action plan produced by the commission will allow us to become a beacon of best practice with regard to financial control, to ensure that every penny of our resources is spent to benefit the people of Newham.”
However, the council said that the focus of the commission will not be to introduce new rules but to produce a change in ways of working within the authority.
A report to cabinet by officers said: “…the council has not lacked procedures and processes; its issue is non-compliance and a failure to deal with non-compliance.
“Therefore the commission is not charged with simply adding new procedures or processes but with establishing the framework for practical and cultural shift to compliance and value for money in everything it does.”
The authority estimates the cost of establishing and running the commission at around £100,000.
Last month, the council revealed more details of internal control failings which it said had led to “a very serious and significant mismanagement of public money” within the RMS.
It said the RMS had managed its finances outside council control, “which allowed it to misrepresent it’s end of year financial position for 16/17 as a profit and not the loss it did make and then overspend its budget in 2017/18 by £8.78m”.
RMS, a report to council said, had managed its own procurement of external contractors at rates significantly higher than the schedule of rates put forward by RMS to the council to cover the cost of the work.”
This was identified by officers in 2016 but it appears no corrective action was then taken by RMS, the report found.
The council also last month released details of previously confidential minutes from a meeting last March which revealed that, during an investigation, officers stated that “the former operational director of RMS had gone to considerable lengths to conceal the financial workings of the operation and to give the impression that RMS was operating as a successful business”.
The operations director was dismissed by the council in December 2017, while three other RMS managers were dismissed for claiming overtime they did not work, councillors were told.
Five more junior members of staff received final written warnings for claiming overtime for work they did not do, the report said.
This week’s report also said that the commission could help address failures that led to the council’s loss of its £52m investment in the London 2012 Olympic Stadium.
It also referenced the East Ham Campus project in 2013/14 “which resulted in statutory reports by the director of finance and director of law & governance arising from the ultra vires decisions made”.
